5 Rocket Stocks to Buy for a March Rally

BALTIMORE ( Stockpickr) -- Another month in 2013 is set to bite the dust this week, as the first trading session in March peeks its head out on Friday. We're about to find out whether the "new month, new market" mantra is going to continue to hold true in 2013.

February would be best described as a "regrouping" month. As I write, the S&P 500 gained just under 1% on the month, hosing off the overheated momentum from January's 5% climb. So are we in store for a second rally leg just as Spring springs? With stocks bouncing hard into February's final week, it looks promising.

For the uninitiated, "Rocket Stocks" are our list of companies with short-term gain catalysts and longer-term growth potential. To find them, I run a weekly quantitative screen that seeks out stocks with a combination of analyst upgrades and positive earnings surprises to identify rising analyst expectations, a bullish signal for stocks in any market. After all, where analysts' expectations are increasing, institutional cash often follows. In the last 188 weeks, our weekly list of five plays has outperformed the S&P 500 by 77.72%.

First up is 176-year-old consumer product giant Procter & Gamble ( PG). Procter is the prototypical blue chip -- the $210 billion firm boasts a product line that's found in homes across the globe, with powerhouse brands such as Tide, Charmin and Cover Girl under its belt. P&G also pays out a nearly 3% dividend yield at current price levels.

P&G's biggest growth story comes from abroad. The firm currently earns approximately 60% of its revenue outside of its U.S. home base, and of that, nearly half comes from emerging markets. That's attractive exposure considering the growth potential in developing markets as burgeoning middle class populations start trading up their consumer products. Despite Procter's titanic size, the firm should be able to continue to stoke growth fires in the year ahead.

Last year, cost was one of P&G's biggest considerations; the firm's ongoing initiative to cut around $10 billion from its cost of goods sold is going to be a key component of income growth in 2013 as well. While input cost inflation hasn't created the same level of anxiety of late as it did back in 2011, Procter's willingness to prioritize costs now will pay off in spades down the road.

UnitedHealth Group

Health insurer UnitedHealth Group ( UNH) is one of the biggest health care names in the country, covering the health policies of more than 77 million Americans. Scale matters in the health insurance business, and UNH has no shortage of scale. After all, when you insure one-in-four Americans, you've got considerable pricing power over medical providers. That, in turn, drives cost-conscious corporate benefits departments to turn to UNH's network for their employees.

Increasingly, UNH is earning its keep not by insuring Americans' health but instead by administering employers' self-insured policies. That's a very good thing for UnitedHealth because it gives the firm a consistent revenue stream without exposure to the possibility of mispricing policy risks. Instead, employers bear the burden of costs while UNH gives them access to a pre-existing network infrastructure. That's an attractive tradeoff for insurers following recent health care reforms.

Some health care reform legislation stands to benefit UNH more directly, though. One big benefit is increased Medicaid expansions that will enable UNH to earn bigger subsidies for patient care. With a solid financial footing and rising analyst sentiment this week, we're betting on shares.

Omnicom Group

2013 is panning out to be a strong year for Omnicom Group ( OMC). Since the first trading day of January, shares of the $15 billion advertising firm have climbed 14.5%, besting the broad market by a wide margin. Omnicom is unique in that it's a publicly traded collection of advertising and marketing agencies. The firm serves more than 5,000 clients worldwide, creating ad spots during the Super Bowl, on regular TV lineups, in print and online.

Some of the most prominent ad agencies in the world, including DDB and BBDO, fall under the Omnicom umbrella, factors that give OMC a big advantage in a saturated industry where reputation counts. Advertising is one space where customers are willing to go with pricier vendors if the level of creativity justifies the price tag. That makes human capital extremely important for OMC. If it loses its talent, it loses its edge. While that makes talent retention a high priority, stellar reputations at OMC's agencies make hanging onto skilled salespeople and creatives that much less difficult.

The service-driven nature of OMC's business means that the firm is able to collect fairly strong net margins for its work -- approaching double digits in the most recent quarter. An uptick in global advertising spending should provide a serious tailwind for Omnicom's business in the next couple of years. As the firm rebounds off of cyclical ad spending lows, investors should prosper.

Dover

Industrial conglomerate Dover ( DOV) owns 40 distinct manufacturing businesses that are primarily focused on bringing niche products to commercial and industrial customers. While that may not sound like the most interesting business, it is certainly a lucrative one.

Dover's business units are more or less autonomous, a management approach that's been very successful for the firm. By minimizing centralized decision making, the firm avoids a management bottleneck and it enables individual subsidiaries to take ownership of their financial performance. Clearly the approach works. Dover converted more than 10 cents on every sales dollar into profits last year, an impressive level of profitability for a stock that's heavily involved in industrial businesses.

Growth-by-acquisition has historically been Dover's approach to growth. And while that's successfully built the firm into a profitable conglomerate, it's also boosted the debt on Dover's balance sheet. Management will need to continue keep purchases in check in 2013 to retain its high level of financial performance for shareholders. That said, rising analyst sentiment is putting this Rocket Stock on our radar this week; we're betting on shares.

Motorola Solutions

Last but certainly not least on our list of Rocket Stock names is Motorola Solutions ( MSI). The firm is arguably the more attractive half of Motorola's business after the firm spun off its beleaguered handset business in 2011 (it was subsequently acquired by Google ( GOOG)), and that's showing in MSI's price performance in 2013: shares have climbed more than 11% year-to-date.

MSI serves government and enterprise customers with hardware, software and services to communicate better. Those offerings range from long-range two-way radios to barcode scanners, wireless LAN networking tools, and RFID chips. I'll be the first to admit that those businesses don't carry the mass-market appeal of handsets right now, but they do make money. The firm's exposure to contract revenues from sources like the U.S. government provides some nice income statement risk reduction that's less threatened by DoD budget constraints. Meanwhile, enterprise IT spending offers one of the biggest potential growth platforms for MSI in the next few years.

A spotless balance sheet with a big net cash position rounds out the picture in MSI. As this firm deploys more cash for the benefit of shareholders, this stock's share price should get buoyed in kind.

At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.